The management of Kent Reliance Building Society (KRBS) has been plotting a
takeover of the mutual for over three years according to documents seen by The
Daily Telegraph.

The building society's management, led by chief executive Mike Lazenby, was considering plans as far back as December 2006 for a buyout that could result in "potentially large personal financial rewards".

"The management for the new company will be the existing Kent Reliance management, however there will no enhanced profits or opportunities for them to invest," he said, adding the older KPMG proposals were never presented to the board and were one of a number of options that were under consideration at the time.

The full details of the deal with JC Flowers will only become clear when the proposal is published in "the near future". Members of the building society will then have the opportunity to vote for or against the plan.

Although the current proposal differs from the one seen by The Daily Telegraph, it reveals how long Mr Lazenby and his management have been considering doing a deal.

The document states the management could get "large personal financial rewards" for "relatively small personal investment".

Under the KPMG forecasts drawn up before the financial crisis the private equity partner could double or triple its money over a three to four-year period. The return for management "should be significantly in excess of this" the document states.

The deal with JC Flowers and the document uncovered by The Daily Telegraph are likely to raise serious questions about the nature and future direction of mutual societies such as Kent Reliance.

Although the societies are run for their members, executives have been criticised for paying themselves high salaries while their organisations have been struggling.

Last year Mr Lazenby took home £535,000, including a £77,000 bonus. The pay deal came despite the building society seeing a 4pc drop in total assets to £2.26bn. Group pre-tax profit also fell from £12.6m in 2008 to £2.3m last year.

However Mr Lazenby disclosed that the next, as yet unpublished, set of accounts would detail a cut in his annual salary.

Although KPMG declined to comment on the document, partner Andrew Gabbertas said the company had "several" advisory relationships with the building society.